Changes in the rules for like-kind exchanges under the Tax Cuts and Jobs Act may lead professional sports teams to trade fewer players, according to tax experts.

It has been long established in the past that player contracts are treated as business assets. Assuming there was no cash involved in the trade, teams would recognize no gain or loss when they traded players. They were just trading the business asset that was their contract. The Tax Cuts and Jobs Act that was passed in December amends 1031 to only certain real estate deals now. Since professional athletes’ contracts aren’t considered real property, some tax experts believe that 1031 exchange treatment will no longer apply to professional sports teams trading players after 2017. Starting this year, sports teams might need to begin recognizing a taxable gain when they trade players, though so far that hasn’t slowed the pace.

While taxes are probably never going to drive sports teams’ trade decisions, they may become a factor in their decisions, considering every time a team traded a player it would be treated as a taxable event, affecting the economics of the trade.

The change in 1031 exchange treatment could prompt several reactions from pro sports teams. Team owners might do fewer overall trades, fewer player-for-player trades, more cash-for-player or player-for-draft picks deals, or the development of an alternative trading procedure that allows trades without triggering adverse tax consequences.

Our assessment of the Tax Cuts and Jobs Act is that it is the most impactful tax law enacted in the last 30 years. Talley welcomes the opportunity to discuss with you the current opportunities available to you and your family. For more information, contact us here.

Apple, which had long deferred paying taxes on its foreign earnings, unveiled plans on Wednesday that would bring back the vast majority of the $252 billion in cash that it held abroad and said it would make a sizable investment in the United States.

With the moves, Apple will take advantage of the new tax code signed into law last month. A provision allows for a one-time repatriation of corporate cash held abroad at a lower tax rate than what would have been paid under the previous tax plan. Apple, which has 94 percent of its total cash of $269 billion outside the U.S., said it would make a one-time tax payment of $38 billion on the repatriated cash.

Apple is one of several multinational giants that have kept a total of roughly $3 trillion in global profits off their domestic books to sidestep the previous 35 percent federal corporate tax rate. Under the new tax law, companies that make a one-time repatriation of cash will be taxed at a rate of 15.5 percent on cash holdings and 8 percent on nonliquid assets. That is lower than the new 21 percent corporate rate. Under the new tax code, Apple would also have been taxed whether it brought the money back or not.

By shifting the money under the new terms, Apple will save approximately $43 billion in taxes, more than any other American company, according to the Institute on Taxation and Economic Policy, a research group in Washington.

Our assessment of the Tax Cuts and Jobs Act is that it is the most impactful tax law enacted in the last 30 years. Talley welcomes the opportunity to discuss with you the current opportunities available to you and your family. For more information, contact us here.

The Treasury Department just published its latest quarterly report revealing the names of people who have given up their U.S. citizenship or long-term residency. 1,376 individuals renounced their citizenship in the third quarter of 2017, putting the annual tally on track to top 2016’s record. 

Short of asking them outright, we can’t know why those on the list chose to leave, but we might infer that taxes could have been at least one of the factors calculated into their decision-making process. That’s because the U.S. requires citizens and green-card holders to file tax returns no matter where they live. So depending on where expats reside, they may be required to pay taxes in the country in which they live and work while also paying the U.S. government.

The Foreign Account Tax Compliance Act could also be influencing some taxpayers to leave their passports behind. The law took effect this year and requires foreign financial institutions to report account information to the U.S., both for U.S. citizens and green-card holders living in the U.S. and abroad.

Ironically, leaving America can be costly. The U.S. charges $2,350 to hand in your passport, a fee that is more than twenty times the average of other high-income countries. The U.S. hiked the fee to renounce by over 400%, as previously there was a $450 fee to renounce, and no fee to relinquish. Now, there is a $2,350 fee either way. The State Department said raising the fee was about demand and paperwork, but the number of American expatriations kept increasing. Moreover, to exit, one generally must prove 5 years of IRS tax compliance.

The decision to expatriate should never be taken lightly, and taxes should never be the sole factor in consideration. There are not only indirect costs to giving up residency in one of the world’s greatest nations but direct ones as well, including the exit tax. Fortunately, there are many strategies for mitigating personal and corporate tax liabilities that may apply to your situation.

Only broadly experienced tax advisory professionals can provide a truly global perspective so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. Talley welcomes the opportunity to discuss with you the current opportunities available to you and your family. For more information, contact us today.

Earlier this week, J.J. Watt launched an online relief fund for Hurricane Harvey victims on Sunday with an initial goal of raising $200,000. Watt started the fundraiser when he and his teammates were stranded in Dallas during the NFL preseason. Incredibly, the fund has raised more than $29 million and is still growing. 

The fund has been buoyed by big donations from some big names in the world of sports. Chris Paul donated $50,000, Watt donated $100,000 of his own money and Tennessee Titans owner and Houston native Amy Adams Strunk donated $1 million on behalf of the Titans organization.

“It’s such a testament to the people out there,’’ Watt, an all-pro defensive end for the Houston Texans, said Sunday when the total raised was at $17 million. “It’s such a testament to how much good there is in the world.’’

The total raised hit the $20 million mark at 1:30 p.m. ET Tuesday, and Watt already has been exploring how best to spend the money. On Sunday, Watt said he had talked to members of Team Rubicon and St. Bernard Project — organizations highly regarded for their natural disaster recovery work — and to people who were involved in Hurricane Katrina’s relief efforts.

“It’s been a pleasure and privilege to work with JJ Watt, his team and his foundation,” said YouCaring CEO Dan Saper. “But even though we’re looking at potentially the largest crowdfunding campaign of all time, it’s important to remember that this is just a drop in the bucket to the damage that was inflicted on the Houston area by Hurricane Harvey.”

No matter the amount, your generosity in donating time and money to worthwhile causes can have a significant impact on your tax liability. While tax considerations should never drive your charitable giving, it makes sense to structure your gifting to maximize the tax benefits. If you have questions regarding your gifting or estate plan, please contact Talley & Company today.

Eager to pay more taxes? Just move to Norway. To no one’s surprise, Norway’s voluntary tax contribution has not been successful. Hammered by the opposition for slashing taxes and going on a spending spree with the country’s oil money, the center-right government has hit back with a bold proposal: voluntary contributions.

Launched in June, the initiative has received a tepid reception so far, with the equivalent of just $1,325 in extra revenue being collected by the program so far, according to the Finance Ministry. That is a paltry amount, considering Norway has a population in the neighborhood of 5.3 million people, many of whom are already accustomed to paying some of the highest taxes in the world (the top rate of income tax is 46.7 percent).

“The tax scheme was set up to allow those who want to pay more taxes to do so in a simple and straightforward way,” Finance Minister Siv Jensen said in an emailed comment. “If anyone thinks the tax level is too low, they now have the chance to pay more.”

Who is ever eager to pay more taxes??

In late 2013, the Norwegian government was faced with one of the worst economic shocks in recent memory as the price of crude plunged. The government responded by aggressively cutting taxes and tapping into the country’s massive wealth fund for the first time.

Left-of-center opposition parties claimed the tax cuts would benefit the richest and boost inequality. Jonas Gahr Store, the wealthy Labor Party contender who is leading in the polls ahead of the September 11 elections, has so far refused to take up the government’s offer.

Ironically, it was Store, whose net worth is $8 million, who prodded the government into action by complaining earlier this year that he had ended up paying less taxes under the current administration.

“This is an election campaign showcase by the government,” said Harald Jacobsen, a political adviser at the Labor party, who argues that the scheme has cost more than what it has generated.

Only broadly experienced tax advisory professionals can provide a truly global perspective so you can preserve, enhance and pass on to the next generation the assets and wealth that you’ve worked hard to build. Talley welcomes the opportunity to discuss with you the current opportunities available to you and your family. For more information, contact us here.

Tax experts are poring over the Senate version of the Republican health care bill, examining the bill’s tax provisions and its differences from the House version of the legislation. Here’s what they have to say.
The two versions of the Senate and House bills are not that far apart, per Dustin Stamper, a director in Grant Thornton’s Washington National Tax Office. “The tax titles are pretty similar in a lot of ways,” he said. “The biggest difference is what to do going forward to continue to offer refundable tax credits for purchasing insurance. The Senate draft is much more generous than the House bill.”
Elliott, the lead executive responsible for overseeing all aspects of the ACA implementation at the IRS, cautioned that what was released was a discussion draft and is likely to change during negotiations.
“Both the House and Senate effectively repeal the individual and employer mandate,” she said. “And they both make significant changes to Medicaid. While the Code will still require applicable individuals to maintain minimum essential coverage, the penalties for filing to do so will be lowered to zero, effective as of Jan. 1, 2016.”
“Both the House and the Senate versions repeal ACA taxes such as the taxes on medical devices, insurance providers, and the tax on high-interest earners,” she noted. “That’s what’s drawing the ire of critics who are claiming it’s in part a tax break for the rich.”
The discussion draft of the Better Care Reconciliation Act of 2017 expands the Affordable Care Act’s “state innovation waivers,” also known as “Obamacare 1332 Waivers,” to provide states additional flexibility to use waivers that exist in current law to decide the rules of insurance and ultimately better allow customers to buy the health insurance they want.
“The key provision for individual taxpayers is that both the House and Senate versions repeal the 3.8 percent tax on net investment income,” said Howard Wagner, managing director in Crowe Horvath’s National Tax Office. “And the Senate version follows the House bill in that the 0.9 percent additional Medicare tax on wages and self-employment income is not repealed until 2023.”
“The important issue for individuals is that until something is enacted, everything is subject to change,” he added. “If you’re considering a transaction such as the sale of a business or the sale of stock that would result in the imposition of tax on net investment income, don’t do it today on the assumption that the tax will be gone for 2017. Aside from the fact that the bills don’t make it into law, there is always the possibility that negotiations could result in changes to the effective date. The final bill that ultimately passes might not repeal the NII tax until 2018 or later.”
The BCRA is slated for negotiation and a vote as early as next week, but four Republican senators have already said they’re not on board. Senate Majority Leader Mitch McConnell, R-Ken., needs 50 votes out of 52 Republicans in the Senate, assuming every Democrat will vote against the bill.
Talley offers a broad spectrum of services to fulfill the needs of high net worth individuals, entrepreneurially driven companies and their owners. Whether you are considering an M&A transaction or experiencing a financial windfall event, the professionals at Talley & Company can make the most of both your earnings and winnings.

 

Source: Accountingtoday.com; June 23, 2017

“No taxes for you!”
The CFO of the soup chain made famous with Seinfeld’s “Soup Nazi” character, Robert N. Bertrand, CFO of the Soupman, Inc. has been indicted for tax crimes. The indictment alleges 20 counts of failure to pay Medicare, Social Security, and federal income taxes. Soupman, Inc. is based in Staten Island, and licenses the name and recipes of Al Yeganeh, the “Soup Nazi” character from Seinfeld. No crime has yet been proven, but the charges are quite serious.
Prosecutors claim that Bertrand was cutting corners in a big way; alleging that between 2010 and 2014, Bertrand paid Soupman employees on the side in unreported cash amounts. A conviction could bring up to five years’ imprisonment.
The indictment claims that he also compensated certain employees in large unreported stock awards. Bertrand never reported this employee compensation to the IRS, and never paid trust fund taxes on the cash payments or the stock awards. The indictment suggests that it may be difficult for Bertrand to claim ignorance. Prosecutors even say that Bertrand received a 2012 warning from an external auditor that these payments should be reported to the IRS.
In fact, from 2010 through 2014, Soupman’s total approximate unreported cash and stock compensation was $2,850,967.59. That translates to a total approximate tax loss to the United States of $593,971.52. Noting the dollars at stake to the federal government, the authorities have also mentioned the potential loss of future Social Security and Medicare benefits for the employees of Soupman Inc.
If you are in business, it can be tempting to figure that you have to keep the rent paid and supplies ordered, and that the IRS won’t miss the payroll tax money if you just divert it temporarily. But, no matter how good the reason, the practice is dangerous. Any failure to pay—even late payment—is serious, regardless of how or why the employer or its principals use the money.
When a tax shortfall occurs, the IRS will usually make personal assessments against all responsible persons who have ownership in or signature authority over the company and its payables. The IRS can assess a Trust Fund Recovery Assessment, also known as a 100-percent penalty, against every “responsible person”. You can be liable even if have no knowledge the IRS is not being paid.
While nearly 70% individual taxpayers will receive a refund this tax season, most taxpayers don’t look forward to Tax Day and are willing to do almost anything to get out of paying taxes. A recent survey by GOBankingRates asked over 1,000 U.S. citizens: “Which of the following would you do to get out of paying your taxes?” The respondents could select from the following answer choices. Here’s how they responded:
  • Perform 5 karaoke songs for your company: 32%
  • Go without WiFi for 1 year: 18%
  • Have your credit score reduced by 50 points: 16%
  • Gain 20 pounds: 13%
  • Have your web browsing history made public: 11%
  • Be stuck with skunk stench for 6 months: 5%
  • Give up half of your retirement savings: 5%
Nearly one-third of respondents to the survey said they’d gladly get up and perform five karaoke songs in front of their company if they could avoid paying taxes. This choice was the clear winner for both females and males in every age group. It’s evident that the clear majority of people interested in getting out of paying their taxes are not afraid of sharing their singing skills with a large without the acoustics of the shower assisting them in their performance.
While the potential embarrassment of singing karaoke would seem trivial if it meant being rewarded with less taxes, some Americans are even willing to put their finances at risk. More than 15% of those surveyed were willing to take a 50 point hit to their credit score in exchange for not paying taxes. By age, GenXers (ages 35 to 54) are the most willing to choose this option. By geographical location, Southerners are more willing to choose this option than those in other parts of the country: those in the Northeast were least likely to choose this option.
A surprising 5% of those surveyed would be willing to give up half of their retirement savings in exchange for not paying taxes. That said, most retirement reports have found that a third of Americans have $0 saved for retirement…so maybe there’s not a lot to lose? GenXers were three times more likely than millennials to choose this option.
GenXers are also more willing to allow their web browsing history to be made public while seniors are more willing than any other age group to go without WiFi for a year. We wonder how many seniors are actually are familiar with WiFi, and what they would actually be giving up if they chose this option.
What would you be willing to do in order to avoid paying your taxes this year?
Talley LLP
Advice. Solutions. Results.
If you’re one of the 40 million Americans who has still not filed their taxes this year, here’s a friendly reminder that might offer a little relief: You have an extra three days to submit your annual return.
Tax Day 2017 is on April 18 this year because of something called the District of Columbia Compensated Emancipation Act, signed into existence by President Lincoln on April 16, 1862. With the stroke of his pen, Lincoln not only freed more than 3,000 enslaved people in the District of Columbia and compensated their owners, but he also messed big-time with Tax Day for years to come.
Does all this ring a little bell? It should. Because last year a similar delay occurred thanks to the holiday, which is observed in D.C. but is not an official work holiday in most places. And last year was even weirder because the emancipation holiday fell on a Saturday but was celebrated on Friday the 15th — gotta get that day off from work! — which meant Tax Day was shoved back to Monday the 18th.
Elsewhere in the United States, the emancipation of slaves is celebrated on different dates in Florida (May 20), Puerto Rico (March 22) and Texas (June 19). And similar events take place throughout the Caribbean, including Anguilla, Bahamas, Bermuda and Barbados, though many of these observances happen in August to commemorate the the day slavery was abolished in the British Empire, which was August 1, 1834.
This time around, we’ll have to wait until Tuesday, April 18, to settle our bills (or refunds) with Uncle Sam.
Which means all the procrastinators out there still have at least three more days to stress out.

Talley

Advice. Solutions. Results.

“The Situation” finds himself with another bad tax situation in his hands. In September 2014, Michael “The Situation” Sorrentino, ex-star of the infamous MTV show “Jersey Shore”, and his brother, Marc, were indicted for tax offenses and conspiring to defraud the U.S. Now, new charges have been brought against both men. Sorrentino is now also charged with tax evasion and structuring funds to evade currency transaction reports. His brother, Marc, is now also charged with falsifying records to obstruct a grand jury investigation.
The superseding indictment alleges that the brothers conspired to defraud the U.S. by not paying all federal income tax owed on approximately $8.9 million that Sorrentino earned between 2010 and 2012. It is alleged that the brothers filed or caused to be filed with the IRS false tax returns that understated gross receipts, claimed fraudulent business deductions, disguised income payments made to the brothers and to other individuals and underreported net business income.
The brothers also allegedly commingled funds among business and personal bank accounts, and used the money from the business bank accounts to pay for personal items, such as high-end luxury vehicles and clothing.
If convicted, the Sorrentino brothers face a statutory maximum sentence of five years in prison on the conspiracy count, and three years in prison for each count of aiding in the preparation of false tax returns. Michael faces a statutory maximum sentence of 10 years in prison for each structuring count, and five years in prison for the tax evasion count. Marc faces a statutory maximum sentence of 20 years in prison for obstruction. They also face a period of supervised release, restitution and monetary penalties.
How’s that for a Tax “Situation”?

 

With over 25 years’ experience consulting with industry-leading companies, we understand the challenges facing entrepreneurs with generating and protecting income. Whether you’re looking to improve your profitability, build your brand through a business transaction or capital raise, Talley is the consulting and financial services firm dedicated to strategic business solutions that deliver meaningful results.

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